Axa Investment Managers, a money-management unit of Europe’s second-largest insurer, is close to ending outflows at its Axa Rosenberg division in the U.S. almost three years after a coding error spurred clients to pull funds.
“We’re seeing the end” of outflows at Axa Rosenberg, Dominique Carrel-Billiard, chief executive officer of Paris-based Axa IM, said in an interview. “The pipeline is recovering and we see it already,” he said, declining to give a time frame for the return to inflows at the Orinda, California-based business.
Outflows last year at Axa Rosenberg, which uses computer models to pick investments, amounted to about 3 billion euros ($3.9 billion), Carrel-Billiard said. That’s down from 5 billion euros in 2011 and 29 billion euros in 2010, when the U.S. unit had a coding error, according to Axa’s website. Axa IM returned to inflows in 2012, helped by its fixed-income, private-equity and Asian franchises.
Axa Rosenberg, which in 2011 agreed to pay $242 million to resolve claims in the first U.S. Securities and Exchange Commission’s case on a quantitative-investment model glitch, had $20.5 billion under management at the end of December, according to the unit’s website. Axa Rosenberg is fully owned by Axa IM.
“Now the issue of the coding error is totally behind us,” Carrel-Billiard said. Axa SA’s Paris-based asset-management unit is “relaunching” Axa Rosenberg and is hiring salespeople in the U.S. to market the division’s new equity-investment products as well as fixed-income or real-estate investment products from Axa IM’s other franchises, he said.
“We need to recreate a market access” to tap U.S. institutional investors, Carrel-Billiard said. “Historically, we had a distribution team in the U.S. that was linked to Rosenberg and sold Rosenberg products, and this team has been largely lost during the crisis,” he said. Alongside Rosenberg’s funds, Axa IM has other U.S. operations including fixed-income asset management.
Axa IM’s total assets under management reached 554 billion euros at the end of 2012, up 8 percent from a year earlier, mostly helped by a rebound in bond markets. Most of Axa IM’s managed assets are invested in fixed income, while 8 percent is invested in equities, according to an e-mailed presentation.
Axa Rosenberg “isn’t any longer a dominant factor in our stocks, but it can be a dominant factor in flows,” Carrel-Billiard said, declining to give an outlook for Axa IM’s 2013 net money flows. Axa IM has a “distinctive platform” in European asset management and its goal is to expand “both in distribution and in production to become a true global leader,” he said.